The Uncle Sam Effect

The Principle:

How do we handle the Uncle Sam effect? We talk today about what taxes can really look like today as well as under the new possible tax plan.

Honest Takes:

Phil Mickelson recently won the 2021 PGA Championship, winning about a million dollars in prize money. What he thought was closer to $2 million turned out to be much less thanks to the “Uncle Sam effect.” Is there an Uncle Sam effect when it comes to our retirement accounts?

With a retirement account, you’re usually only taking out a little every year–enough for retirement income or to cover your RMDs. The taxes that a small business owner or farmer might pay when they sell their business or property is where you really see this effect. Is this only impacting the really wealthy? What about the families wanting to pass down their business as an inheritance? What strategies need to be implemented?

With the new tax plan under Biden, tax planning will likely increase. How might this look? Small business owners, real estate, and others will have more taxes to consider and less money to invest. This could then slow the economy. Be sure to meet with an advisor to see if your financial plan is prepared for whatever may come in the future.

Listen to the entire episode or skip ahead using the timestamps below.

[0:12] – What exciting things are happening in Brian’s life?

[3:08] – What’s the Uncle Sam Effect?

[7:19] – What kind of tax planning do you need to consider?

Today’s Truth:

“I think tax planning is going to increase a lot with this new tax plan.”

Brian Bowen


The Host:

Brian Bowen – Contact